Re: <nettime> Michael Malone : Regulating Destruction

[Brian Holmes <brian.holmes@wanadoo.fr>]

Patrice Riemens wrote:

>" The result was Sarbanes-Oxley, Regulation FD ('Fair Disclosure', aka
>'Fear and Doubt' - PR), and stock option valuation (by the IRS -PR)- three
>great lessons in the law of unintended consequences. Let's do our own
>accounting: Thanks to this troika, fewer companies are going public; economic
>power is being concentrated in the hands of fewer companies; competition is
>reduced; new wealth is less widely distributed; the rich are getting richer;
>fewer talented people want to join entrepreneurial ventures; and corporate
>boards are getting stupider and more paranoid (- a reference to the recent HP
>bandobust -PR). And, please note, one of the crucial triggers for economic
>booms - a burts that of young tech companiy IPOs - has now largely evaporated.
>
>Just curious, but is this really what federal regulators, Congress and
>shareholder rights activists had in mind? "

The full article can be found here:
http://online.wsj.com/article_email/SB116667005208856400-lMyQjAxMDE2NjI2MTYyNzEwWj.html

This is dodgy stuff, Patrice. Mainly just anti-regulatory fulminations, 
at a pretty low level of interest as far as I can tell. First of all, 
there are less IPOs because there is less silly money out there: the 
same kinds of middle-class investors who made the dotcom bubble and then 
lost their savings when it burst are now in the process of losing their 
shirts in the bursting of the housing bubble. Second of all, after a 
period of intense speculation and then a big shake out and collapse of 
values, a period of corporate consolidation and attempts to re-establish 
oligopoly positions is just about as ordinary as capitalism itself. 
Felix's use of the word "cartel" heads in exactly this direction. But 
it's also true that before the bubble, being bought out by a larger 
company was simply the natural destiny of start-ups - and now we are 
back to that part of the cycle. Elsewhere in the article, the author 
laments the fact that all the IPO action is now happening in Hong Kong. 
But the appearance of hot money in Asia right now is also quite 
predictable, especially in China, whose fantastic industrial growth has 
produced a veritable overflow of capital, an excess of the kind which is 
actually dangerous for the stability of the banking sector. So why does 
Michael Malone get so worked up? Answer: he's nostalgic for the 
champagne days in Silicon Valley, and above all, he's just plain full of 
shit and wants to sell a little of it to the WSJ. Or so it appears from 
my perspective.

The question raised by Mark Stahlman, as to whether all this signifies a 
turn away from financialization and the beginning of a new industrial 
cycle of the kind described by Carlota Perez, is pretty uncertain imho. 
Youtube is not exactly an industry. It's a device for capturing and 
channeling the attention of people living on credit (as pretty much all 
of the Americans do - average indebtedness is now up to something like 
110% of earnings). The Triad countries - Europe, North America, Japan - 
are all deeply mired in the process of managing financial capital, and 
of those three ultrarich regions, only Japan has really managed to make 
its financial capital materially productive. By investing that part of 
it which does not feed the US appetite for credit into Chinese and South 
East Asian industrial production.

best, Brian


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